GST authorities can seize cash as “things” under CGST Act during investigations

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Case Name

Smt. Kanishka Matta Vs. Union of India and Others

Court: High Court of Madhya Pradesh, Bench at Indore

Writ Petition No.: 8204/2020

Date of Judgment: 26/08/2020

Key Takeaways

1. Cash Can Be Seized Under GST Law: The court clarified that the word “things” in Section 67(2) of the CGST Act, 2017 includes cash and money, not just physical goods or documents.
2. Wide Interpretation of “Things”: Using legal dictionaries and principles of statutory interpretation, the court gave a broad meaning to the term “things,” establishing that it encompasses any subject matter of ownership or valuable rights, including money.
3. Limited Judicial Interference at Search Stage: The court established that High Courts should not interfere with search and seizure operations at the initial investigation stage by scrutinizing the sufficiency of reasons or grounds.
4. Confessional Statements Are Binding: Even if someone retracts a confessional statement made to customs or GST officers later, it remains binding and admissible as evidence.
5. Investigation Must Be Completed First: The court held that the question of releasing seized amounts doesn’t arise until the investigation is completed and the matter is finally adjudicated.

Issue

Can GST authorities seize cash under Section 67(2) of the CGST Act, 2017, or does the word “things” in that section only refer to physical goods and documents?

In simpler terms: Does the law allow authorities to take away cash during a GST investigation, or can they only seize goods and papers?

Facts

The Business Setup:

Shri Sanjay Matta was running a business called M/s S.S Enterprises, which dealt in confectionery and pan masala items. His wife, Smt. Kanishka Matta, filed this petition on his behalf.

The Search Operation:

On May 30-31, 2020, GST authorities conducted search operations at both the business premises and the residential premises of Shri Sanjay Matta and another person named Shri Sandeep Matta.

What They Found:

During the searches, the authorities discovered something quite serious:

• Huge quantities of pan masala, tobacco, mouth freshener, and confectionery items were stored in various godowns (warehouses)

• These godowns were not declared as either the principal place of business or additional places of business, which is mandatory under Section 22 of the CGST Act, 2017 read with Rule 8 of CGST Rules, 2017

• Most importantly, Shri Sanjay Matta himself admitted in his statement that goods worth approximately Rs. 40.11 crores were sold without any bills or invoices during the period from April 2019 to May 2020

• He also admitted that the GST liability on these illegal sales amounted to Rs. 18.77 crores

The Cash Seizure:

Based on these findings, the authorities seized Rs. 66,43,130 (about 66 lakhs) in cash from the residential premises, believing it was the proceeds from these illegal sales. They documented this seizure in a Panchnama (an official record of seizure) dated May 30, 31, and June 5, 2020.

The Legal Challenge:

Smt. Kanishka Matta then filed a writ petition in the High Court asking the court to order the release of this seized cash.

Arguments

Petitioner’s Arguments (Smt. Kanishka Matta):

1. "Things" Doesn’t Include Cash: The petitioner argued that the word “things” in Section 67(2) of the CGST Act only refers to physical goods, documents, and records—not cash or money. Therefore, the authorities had no legal right to seize the cash.
2. Retracted Confessional Statement: The petitioner’s husband had made confessional statements admitting to the illegal sales, but later retracted them. The petitioner argued that these retracted statements should not be relied upon and therefore the entire seizure was baseless.
3. Reliance on Foreign Exchange Case: The petitioner cited the case of Vinod Solanki Vs. Union of India and Another (2008) 16 SCC 537, arguing that retracted confessions must be substantially corroborated by independent evidence before they can be used.

Respondent’s Arguments (Union of India/GST Authorities):

1. "Things" Has a Broad Meaning: The authorities argued that the word “things” in Section 67(2) should be interpreted broadly to include cash and money, as it refers to any subject matter of ownership or valuable rights.
2. Statutory Interpretation Principles: The authorities relied on the principle that statutes should be interpreted to suppress the mischief and advance the remedy. If cash couldn’t be seized, it would defeat the purpose of GST enforcement.
3. Confessional Statements Are Binding: Even though the husband retracted his statement, it remains binding because it was made to GST officers (not police), and such statements are admissible as evidence.
4. Limited Judicial Interference: The authorities argued that the High Court should not interfere with search and seizure operations at the investigation stage, as there’s a complete mechanism under the CGST Act to handle such matters.

Key Legal Precedents

1. D. Vinod Shivappa Vs. Nanda Belliappa (2006) 6 SCC 456

What the Supreme Court Said:

The court established the principle of “purposive construction” or the “mischief rule” in interpreting statutes. This means when reading a law, courts should adopt the interpretation that:

• Suppresses the mischief (the problem the law was meant to fix)
• Advances the remedy (the solution the law was meant to provide)

How It Was Applied:

The Indore High Court used this principle to interpret the word “things” broadly. If “things” didn’t include cash, it would defeat the purpose of GST enforcement, which is to prevent tax evasion. So, the court interpreted “things” to include cash.

2. Director General of Income Tax (Investigation) & Others v/s Spacewood Furnishers Pvt. Ltd & Others (2015) 374 ITR 595 (SC)

What the Supreme Court Said:

The Supreme Court held that when reviewing search and seizure operations, High Courts cannot:

• Question whether the reasons given were sufficient or adequate
• Challenge the authenticity or acceptability of the information on which the officer formed their belief

How It Was Applied:

The Indore High Court used this to decline interfering with the search and seizure operation. The court said it couldn’t question whether the authorities had good enough reasons to conduct the search.

3. Dr. Pratap Singh & Another v/s Director of Enforcement & Others (AIR 1985 SC 989)

What the Supreme Court Said:

Even if there’s some illegality in how a search was conducted, the evidence collected during that search is still valid and can be used.

How It Was Applied:

This supported the court’s position that even if there were minor defects in the search procedure, the cash seizure and the evidence gathered couldn’t be thrown out.

4. Aditya Narayan Mahasupakar v/s Chief Commissioner of Income Tax & Others (2017) 392 ITR 131 (Orissa)

What the Orissa High Court Said:

High Courts should not examine whether the grounds that led an Income Tax Officer to conduct a search were sufficient or insufficient.

How It Was Applied:

This reinforced the principle that the Indore High Court shouldn’t second-guess the GST authorities’ decision to conduct the search.

5. Surjeet Singh Chhabra Vs. Union of India (1997) 89 E.L.T. 646 (S.C.)

What the Supreme Court Said:

Confessional statements made before Customs Officers (not police) are binding admissions, even if the person later retracts them within a short period.

How It Was Applied:

Since Shri Sanjay Matta made his confessional statement to GST officers and later retracted it, the court held that the original statement was still binding and could be relied upon.

6. R. S. Company Vs. Commissioner of Central Excise (2017) 351 E.L.T. 264 (M.P.)

What the Court Said:

This case also dealt with confessional statements and decided in favor of the revenue (the government).

How It Was Applied:

This supported the court’s view that the petitioner’s argument about the retracted statement didn’t help her case.

7. Vinod Solanki Vs. Union of India and Another (2008) 16 SCC 537

What the Supreme Court Said:

When a confession is retracted, it must be substantially corroborated by other independent and cogent evidence before it can be relied upon. However, retracted confessions can also be used as corroborative evidence (supporting evidence) rather than the sole basis for a decision.

How It Was Applied:

The Indore High Court acknowledged this principle but noted that the case was still at the investigation stage. The authorities were still collecting evidence, so this principle about needing corroboration didn’t apply yet. The court said this judgment was “of no help” at the investigation stage.

Judgement

Decision: The Writ Petition is DISMISSED

The court ruled in favor of the Union of India (the GST authorities) and against Smt. Kanishka Matta.

The Court’s Reasoning:

1. Cash Can Be Seized Under Section 67(2) of CGST Act, 2017:

The court made a crucial finding: the word “things” in Section 67(2) of the CGST Act, 2017 includes cash and money. Here’s how the court reasoned this:

• The court looked at the definitions in the CGST Act, particularly Section 2(17) which defines “business,” Section 2(31) which defines “consideration” (which includes money), Section 2(75), and Section 67(2) itself.

• By reading these sections together, the court concluded that money can be seized by authorized officers.

• The court referred to legal dictionaries:
• Black’s Law Dictionary (10th Edition) defines “thing” as “any subject matter of ownership within the sphere of proprietary or valuable right”
• Wharton’s Law Lexicon specifically includes “money” in its definition of “thing”

• The court applied the principle from D. Vinod Shivappa Vs. Nanda Belliappa (2006) 6 SCC 456 that statutes should be interpreted to suppress the mischief and advance the remedy. If cash couldn’t be seized, it would make GST enforcement ineffective.

2. The Confessional Statement Remains Valid:

Even though Shri Sanjay Matta retracted his statement later, the court held that:

• Confessional statements made to GST/Customs officers are binding admissions, as established in Surjeet Singh Chhabra Vs. Union of India (1997) 89 E.L.T. 646 (S.C.)

• The fact that he retracted it doesn’t change this

• The case of R. S. Company Vs. Commissioner of Central Excise (2017) 351 E.L.T. 264 (M.P.) also supported this view

3. The Court Cannot Interfere at the Investigation Stage:

The court held that:

• High Courts have very limited scope to interfere with search and seizure operations at the initial investigation stage

• As per Director General of Income Tax (Investigation) & Others v/s Spacewood Furnishers Pvt. Ltd & Others (2015) 374 ITR 595 (SC), the court cannot question the sufficiency of reasons or the authenticity of information on which the officer formed their belief

• Even if there were minor defects in the search procedure, the evidence collected cannot be brushed aside, as per Dr. Pratap Singh & Another v/s Director of Enforcement & Others (AIR 1985 SC 989)

• The Aditya Narayan Mahasupakar v/s Chief Commissioner of Income Tax & Others (2017) 392 ITR 131 (Orissa) case also established that High Courts should not examine the sufficiency of grounds for conducting a search

4. The Retracted Confession Argument Doesn’t Help:

The petitioner relied on Vinod Solanki Vs. Union of India and Another (2008) 16 SCC 537, which says retracted confessions need corroboration. However, the court noted that:

• This case was about final conviction, not investigation
• At the investigation stage, authorities are still collecting evidence, so this principle doesn’t apply yet

5. The Amount Cannot Be Released Until Investigation is Complete:

The court concluded that:

• The authorities have rightly seized the amount
• Unless and until the investigation is carried out and the matter is finally adjudicated, the question of releasing the amount does not arise

Final Order:

The writ petition is dismissed. The seized cash of Rs. 66,43,130 will remain with the authorities during the investigation.

FAQs

Q1: Does this judgment mean GST authorities can seize any cash they find?

A: Not exactly. The judgment clarifies that authorities can seize cash under Section 67(2) of the CGST Act, 2017, but only when they have reasonable belief that it’s connected to illegal business activities or tax evasion. They can’t just seize cash arbitrarily. In this case, they had evidence that the business owner had admitted to selling goods worth Rs. 40.11 crores without proper invoices.

Q2: What if someone retracts their confessional statement? Can it still be used against them?

A: Yes, according to this judgment. If you make a confessional statement to GST or Customs officers, it’s considered a binding admission even if you retract it later. However, this applies at the investigation stage. If the case goes to trial or final adjudication, the court may require additional corroborating evidence, as mentioned in the Vinod Solanki case.

Q3: Can I challenge a search and seizure operation in court immediately?

A: It’s very difficult. The judgment establishes that High Courts have very limited scope to interfere with search and seizure operations at the investigation stage. You cannot question whether the authorities had sufficient reasons or whether the information they relied on was authentic. The proper way to challenge the seizure is through the complete mechanism provided under the CGST Act after the investigation is complete.

Q4: What happens to the seized cash now?

A: The cash will remain with the authorities during the investigation. Once the investigation is complete and the matter is finally adjudicated (decided), the court will determine what happens to it. If the person is found guilty of tax evasion, the cash may be forfeited or used to pay the tax dues. If they’re found not guilty, it may be returned.

Q5: Does this judgment apply only to GST cases or to other tax laws too?

A: While this judgment is specifically about the CGST Act, 2017, the principles it establishes (like the broad interpretation of “things” and the limited scope of judicial interference in search operations) are based on Supreme Court precedents that apply to other tax laws like Income Tax as well. So, similar principles would likely apply to searches under the Income Tax Act, 1961.

Q6: What does “Panchnama” mean?

A: A Panchnama is an official document prepared by authorities during a search and seizure operation. It records what was found, what was seized, and the details of the seizure. It’s signed by the officers conducting the search and often by witnesses. In this case, Panchnamas were prepared on May 30, 31, and June 5, 2020.

Q7: Why did the court say the petitioner’s argument about needing corroboration didn’t apply?

A: The petitioner relied on the Vinod Solanki case, which says retracted confessions need corroboration by independent evidence. However, that case was about final conviction in a criminal trial. In this case, the investigation was still ongoing—authorities were still collecting evidence. So, the court said that principle didn’t apply at this stage. Once the investigation is complete and the case goes to adjudication, that principle might become relevant.

Q8: What is Section 67(2) of the CGST Act, 2017?

A: Section 67(2) of the CGST Act, 2017 gives GST authorities the power to seize goods, documents, books, and “things” that they reasonably believe are connected to illegal business activities or tax evasion. The key contribution of this judgment is clarifying that “things” includes cash and money.

Q9: What about the claim that Shri Sanjay Matta was a Pakistani national?

A: The judgment mentions that the GST Department initially stated that Shri Sanjay Matta was a Pakistani national. However, the petitioner’s counsel controverted (disputed) this during arguments and stated that Shri Sanjay Matta was later granted Indian citizenship. The court didn’t make a final determination on this issue as it wasn’t central to the case.

Q10: What is the significance of this judgment for GST compliance?

A: This judgment sends a clear message: GST authorities have strong powers to investigate and seize assets (including cash) when they suspect tax evasion. Businesses must maintain proper records, declare all places of business, and issue proper invoices for all sales. Attempting to hide business activities or making false statements to authorities can result in seizure of assets and serious legal consequences.

Shri Vivek Dalal with Shri Lokendra Joshi, learned counsel for the petitioner.

Shri Prasanna Prasad, learned counsel for the respondents.

The petitioner before this Court has filed this present petition for issuance of an appropriate writ, order or direction directing the respondent No.4 – Assistant Director, DGGSTI, Indore and respondent No.5 – Senior Intelligence Officer, DGGSTI, Indore to release the cash amounting to Rs.66,43,130/- seized from the petitioner vide Panchnama dated 30/05/2020 from the residential premises of the petitioner and her husband.

02- The petitioner is the wife of Shri Sanjay Matta. Shri Sanjay

Matta is the Proprietor of the firm functioning in the name and style of

M/s. S. S. Enterprises. The Firm is in the business of Confectionery

and Pan Masala items. The petitioner has further stated that search

operation was carried out by respondent No.5 (Senior Intelligence

Officer, DGGSTI, Indore) at the business premises as well as

residential premises and a Panchnama was drawn on 31/05/2020. The

respondents have also seized an amount to the tune of Rs.66 Lakhs

as per the Panchnama prepared by them.

03- Shri Vivek Dalal, learned counsel for the petitioner has

vehemently argued before this Court that the respondent No.5 has got

no power vested under Section 67(2) of the Central Goods and

Services Tax Act, 2017 (CGST Act, 2017) to effect seizure of cash

amount from the petitioner nor from her husband. He has stated that

the cash cannot be treated as “Document, Book or Things” as per the

definition under the definition clause of the CGST Act, 2017 and

therefore, the respondents be directed to release the cash, which they

have seized.

04- It has also been stated that as per the provisions of

Section 37 of CGST Act, 2017 there is a procedure for filing of returns

by the assessee and return could not be filed in time on account of

lockdown keeping in view the Covid-19 Pandemic. It has vehemently

been argued that the sale proceeds were kept by the petitioner and

her husband and the respondents have illegally seized the money

without their being any provision of law.

05- It has also been stated that the statement of the

petitioner's husband was recorded on 30/05/2020, 31/05/2020,

01/06/2020 and 02/06/2020 and he was tortured in the name of tax

terrorism by the authorities. The basic thrust is on the ground that

without their being any provision under the CGST Act, 2017 the

amount as seized by the respondents could not have been done and

the same is violative of Article 14 of the Constitution of India. The

another ground raised by the petitioner that the raid on the residential

premises of petitioner and her husband is again violative of Article 19

and finally a prayer has been made to release the seized cash / sale

proceeds to the tune of Rs.66,43,130/-.

06- A reply has been filed in the matter by respondents No.1

to 5 and it has been stated that from the Directorate of Revenue

Intelligence, a specific input was received that Shri Sanjay Matta is

involved in large scale of evasion of GST on Pan Masala. The proper

officer under reasonable beliefs that the goods / documents / things

were secreted at the said premises, issued a search warrant dated

30/05/2020 and a consequential search was carried out at the

residential premises of Shri Sanjay Matta on 30/05/2020 by the Team

of Directorate General of GST Intelligence. A Panchnama dated

30/05/2020 was also prepared and the officers seized documents and

cash amounting to Rs.66,43,130/-.

07- It has been stated that the documents and cash were

seized in terms of Section 67(2) of the CGST Act, 2017 and the Order

of Seizure in Form GST INS-02 dated 30/05/2020 was issued. It has

also been stated that Shri Sanjay Matta, the husband of the petitioner,

made a voluntary statement stating categorically that the said cash of

Rs.66,43,130/- was the sale proceeds of the illegally sold Pan Masala

without payment of GST.

08- The present petitioner is certainly not registered with GST

Department and the investigation reveals that cash / documents

seized, do not pertain to the applicant. The respondents have stated

that the petition deserves to be dismissed as the petitioner does not

have locus to file the present petition. It has been stated that as per

the voluntary statement dated 30/05/2020 the said cash of

Rs.66,43,130/- was the sale proceeds of illegally sold Pan Masala

without payment of GST. The respondents have stated that keeping in

view Section 67(2) of the CGST Act, 2017 read with definition Clause

makes it very clear that the respondents were justified in seizing the

amount from the petitioner and the statute empowers them to do so.

The respondents have also submitted the Case Diary in a sealed

cover before this Court.

09- A rejoinder has been filed in the matter and the stand of

the petitioner is that by no stretch of imagination Section 67(2) of the

GST Act, 2017 empowers the respondents to seize the cash and later

on the husband of the petitioner Shri Sanjay Matta has retracted the

statement vide affidavit dated 07/06/2020 and in light of his affidavit

dated 07/06/2020 the respondents should release the cash forthwith.

10- Heard learned counsel for the parties at length and

perused the record including the case diary. The matter is being

disposed of at motion hearing stage itself with the consent of the

parties.

11- The statement made in the case diary reveals that Shri

Sanjay Matta, a Pakistani National, was involved in illicit supply of Pan

Masala of various brands without invoices and without payment of

applicable GST (this statement of the Department that Shri Sanjay

Matta is a Pakistani National was controverted during the arguments

by learned counsel for the petitioner and he has stated that later on

Shri Sanjay Matta has been granted Indian citizenship).

12- The case diary also reveals that the searches were

conducted on 30/05/2020 and 31/05/2020 at the residential premises

of Shri Sanjay Matta and Shri Sandeep Matta and various godowns

operated by them on the reasonable belief that the aforesaid premises

are being used to clandestinely store goods / records / documents /

things. During the searches it was found that huge quantity of Pan

Masala and tobacco were lying / stored in the various godowns of Shri

Sanjay Matta which are neither declared as principal place of business

nor as additional place of business as mandatorily required under

Section 22 of CGST Act, 2017 read with Rule 8 of CGST Rules, 2017.

13- Goods comprising of Pan Masala, Tobacco, Mouth

Freshener, Confectionery, etc. valued at Rs.2.59 Crores were seized

under Section 67(2) of the CGST Act read with Section 129 of the

CGST Act and Section 130 of CGST Act from six godowns operated

by Shri Sanjay Matta and his brother Shri Sandeep Matta as no bills /

invoices could be produced by them. Unaccounted cash of

Rs.66,43,130/- was also seized from the residential premises of Shri

Sanjay Matta.

14- The case diary also reveals that seizure was done under

Section 67(2) of the CGST Act, 2017 under a reasonable belief that

the aforesaid are the proceeds of the illicit supply of goods namely

Tobacco and Pan Masala and would be useful for further investigation.

Panchnama dated 30/05/2020, 31/05/202 and 05/06/2020 were also

brought to the notice of this Court. The case diary also reveals that

Shri Sanjay Matta in his statement before the officers have stated

categorically that the value of the goods sold without any bills and

invoices during the period April, 2019 to May, 2020 would be

approximately 40.11 Crores in cash and the GST on the said

clandestine clearance works out to Rs.18.77 Crores.

15- There are other persons involved in the matter, however,

as the controversy involved in the present case only relates to the

seizure of cash, this Court is not referring to the names of the other

persons involved in the matter nor in respect of other recoveries and

other seizures from other persons.

16- The statutory provisions as contained under the Central

Goods and Services Tax Act, 2017, which are necessary for deciding

the present writ petition reads as under:-

“2. Definitions

In this Act, unless the context otherwise requires.–

2(17). “business” includes––

(a) any trade, commerce, manufacture,

profession, vocation, adventure, wager or

any other similar activity, whether or not it is

for a pecuniary benefit;

(b) any activity or transaction in connection with

or incidental or ancillary to sub-clause (a);

(c) any activity or transaction in the nature of

sub-clause (a), whether or not there is

volume, frequency, continuity or regularity of

such transaction;

(d) supply or acquisition of goods including

capital goods and services in connection

with commencement or closure of business;

(e) provision by a club, association, society, or

any such body (for a subscription or any

other consideration) of the facilities or

benefits to its members;

(f) admission, for a consideration, of persons to

any premises;

(g) services supplied by a person as the holder

of an office which has been accepted by him

in the course or furtherance of his trade,

profession or vocation;

[(h) activities of a race club including by way of

totalisator or a license to book maker or

activities of a licensed book maker in such

club; and]

(i) any activity or transaction undertaken by the

Central Government, a State Government or

any local authority in which they are

engaged as public authorities;

2(31). “consideration” in relation to the supply of goods or

services or both includes––

(a) any payment made or to be made, whether

in money or otherwise, in respect of, in

response to, or for the inducement of, the

supply of goods or services or both, whether

by the recipient or by any other person but

shall not include any subsidy given by the

Central Government or a State Government;

(b) the monetary value of any act or

forbearance, in respect of, in response to, or

for the inducement of, the supply of goods

or services or both, whether by the recipient

or by any other person but shall not include

any subsidy given by the Central

Government or a State Government:

Provided that a deposit given in respect of

the supply of goods or services or both shall

not be considered as payment made for

such supply unless the supplier applies such

deposit as consideration for the said supply;

2(75). “money” means the Indian legal tender or any

foreign currency, cheque, promissory note, bill of

exchange, letter of credit, draft, pay order, traveller

cheque, money order, postal or electronic

remittance or any other instrument recognised by

the Reserve Bank of India when used as a

consideration to settle an obligation or exchange

with Indian legal tender of another denomination

but shall not include any currency that is held for its

numismatic value;

37. Furnishing details of outward supplies

(1) Every registered person, other than an Input Service

Distributor, a non-resident taxable person and a person paying

tax under the provisions of section 10 or section 51 or section

52, shall furnish, electronically, in such form and manner as may

be prescribed, the details of outward supplies of goods or

services or both effected during a tax period on or before the

tenth day of the month succeeding the said tax period and such

details shall be communicated to the recipient of the said

supplies within such time and in such manner as may be

prescribed:

PROVIDED that the registered person shall not be

allowed to furnish the details of outward supplies during the

period from the eleventh day to the fifteenth day of the month

succeeding the tax period:

PROVIDED FURTHER that the Commissioner may, for

reasons to be recorded in writing, by notification, extend the time

limit for furnishing such details for such class of taxable persons

as may be specified therein:

PROVIDED ALSO that any extension of time limit notified

by the Commissioner of State tax or Commissioner of Union

territory tax shall be deemed to be notified by the Commissioner.

(2) Every registered person who has been communicated

the details under sub-section (3) of section 38 or the details

pertaining to inward supplies of Input Service Distributor under

sub-section (4) of section 38, shall either accept or reject the

details so communicated, on or before the seventeenth day, but

not before the fifteenth day, of the month succeeding the tax

period and the details furnished by him under sub-section (1)

shall stand amended accordingly.

(3) Any registered person, who has furnished the details

under sub-section (1) for any tax period and which have

remained unmatched under section 42 or section 43, shall, upon

discovery of any error or omission therein, rectify such error or

omission in such manner as may be prescribed, and shall pay

the tax and interest, if any, in case there is short payment of tax

on account of such error or omission, in the return to be

furnished for such tax period:

PROVIDED that no rectification of error or omission in

respect of the details furnished under sub-section (1) shall be

allowed after furnishing of the return under section 39 for the

month of September following the end of the financial year to

which such details pertain, or furnishing of the relevant annual

return, whichever is earlier.

Explanation : For the purposes of this Chapter, the expression

“details of outward supplies” shall include details of invoices,

debit notes, credit notes and revised invoices issued in relation

to outward supplies made during any tax period.

41. Claim of input tax credit and provisional acceptance

thereof(1) Every registered person shall, subject to such

conditions and restrictions as may be prescribed, be entitled to

take the credit of eligible input tax, as self-assessed, in his return

and such amount shall be credited on a provisional basis to his

electronic credit ledger.

(2) The credit referred to in sub-section (1) shall be

utilised only for payment of self-assessed output tax as per the

return referred to in the said sub-section.

52. Collection of tax at source

(1) Notwithstanding anything to the contrary contained in

this Act, every electronic commerce operator (hereafter in this

section referred to as the “operator”), not being an agent, shall

collect an amount calculated at such rate not exceeding one per

cent., as may be notified by the Government on the

recommendations of the Council, of the net value of taxable

supplies made through it by other suppliers where the

consideration with respect to such supplies is to be collected by

the operator.

Explanation : For the purposes of this sub-section, the

expression “net value of taxable supplies” shall mean the

aggregate value of taxable supplies of goods or services or both,

other than services notified under sub-section (5) of section 9,

made during any month by all registered persons through the

operator reduced by the aggregate value of taxable supplies

returned to the suppliers during the said month.

(2) The power to collect the amount specified in sub-

section (1) shall be without prejudice to any other mode of

recovery from the operator.

(3) The amount collected under sub-section (1) shall be

paid to the Government by the operator within ten days after the

end of the month in which such collection is made, in such

manner as may be prescribed.

(4) Every operator who collects the amount specified in

sub-section (1) shall furnish a statement, electronically,

containing the details of outward supplies of goods or services or

both effected through it, including the supplies of goods or

services or both returned through it, and the amount collected

under sub-section (1) during a month, in such form and manner

as may be prescribed, within ten days after the end of such

month.

(5) Every operator who collects the amount specified in

sub-section (1) shall furnish an annual statement, electronically,

containing the details of outward supplies of goods or services or

both effected through it, including the supplies of goods or

services or both returned through it, and the amount collected

under the said sub-section during the financial year, in such form

and manner as may be prescribed, before the thirty first day of

December following the end of such financial year.

(6) If any operator after furnishing a statement under sub-

section (4) discovers any omission or incorrect particulars

therein, other than as a result of scrutiny, audit, inspection or

enforcement activity by the tax authorities, he shall rectify such

omission or incorrect particulars in the statement to be furnished

for the month during which such omission or incorrect particulars

are noticed, subject to payment of interest, as specified in sub-

section (1) of section 50:

PROVIDED that no such rectification of any omission or

incorrect particulars shall be allowed after the due date for

furnishing of statement for the month of September following the

end of the financial year or the actual date of furnishing of the

relevant annual statement, whichever is earlier.

(7) The supplier who has supplied the goods or services

or both through the operator shall claim credit, in his electronic

cash ledger, of the amount collected and reflected in the

statement of the operator furnished under sub-section (4), in

such manner as may be prescribed.

(8) The details of supplies furnished by every operator

under sub-section (4) shall be matched with the corresponding

details of outward supplies furnished by the concerned supplier

registered under this Act in such manner and within such time as

may be prescribed.

(9) Where the details of outward supplies furnished by the

operator under sub-section (4) do not match with the

corresponding details furnished by the supplier under section 37,

the discrepancy shall be communicated to both persons in such

manner and within such time as may be prescribed.

(10) The amount in respect of which any discrepancy is

communicated under sub-section (9) and which is not rectified by

the supplier in his valid return or the operator in his statement for

the month in which discrepancy is communicated, shall be added

to the output tax liability of the said supplier, where the value of

outward supplies furnished by the operator is more than the

value of outward supplies furnished by the supplier, in his return

for the month succeeding the month in which the discrepancy is

communicated in such manner as may be prescribed.

(11) The concerned supplier, in whose output tax liability

any amount has been added under sub-section (10), shall pay

the tax payable in respect of such supply along with interest, at

the rate specified under sub-section (1) of section 50 on the

amount so added from the date such tax was due till the date of

its payment.

(12) Any authority not below the rank of Deputy

Commissioner may serve a notice, either before or during the

course of any proceedings under this Act, requiring the operator

to furnish such details relating to—

(a) supplies of goods or services or both

effected through such operator during any

period; or

(b) stock of goods held by the suppliers making

supplies through such operator in the

godowns or warehouses, by whatever name

called, managed by such operator and

declared as additional places of business by

such suppliers,as may be specified in the notice.

(13) Every operator on whom a notice has been served

under sub-section (12) shall furnish the required information

within fifteen working days of the date of service of such notice.

(14) Any person who fails to furnish the information

required by the notice served under sub-section (12) shall,

without prejudice to any action that may be taken under section

122, be liable to a penalty which may extend to twenty- ive

thousand rupees.

Explanation : For the purposes of this section, the

expression “concerned supplier” shall mean the supplier of

goods or services or both making supplies through the operator.

67. Power of inspection, search and seizure.

(2). Where the proper officer, not below the rank of Joint

Commissioner, either pursuant to an inspection carried out under

sub-section (1) or otherwise, has reasons to believe that any

goods liable to confiscation or any documents or books or things,

which in his opinion shall be useful for or relevant to any

proceedings under this Act, are secreted in any place, he may

authorise in writing any other officer of central tax to search and

seize or may himself search and seize such goods, documents

or books or things:

PROVIDED that where it is not practicable to seize any

such goods, the proper officer, or any officer authorised by him,

may serve on the owner or the custodian of the goods an order

that he shall not remove, part with, or otherwise deal with the

goods except with the previous permission of such officer:

PROVIDED further that the documents or books or things

so seized shall be retained by such officer only for so long as

may be necessary for their examination and for any inquiry or

proceedings under this Act.

75. General provisions relating to determination of tax

(1) Where the service of notice or issuance of order is

stayed by an order of a court or Appellate Tribunal, the period of

such stay shall be excluded in computing the period specified in

sub-sections (2) and (10) of section 73 or sub-sections (2) and

(10) of section 74, as the case may be.

(2) Where any Appellate Authority or Appellate Tribunal or

court concludes that the notice issued under sub-section (1) of

section 74 is not sustainable for the reason that the charges of

fraud or any wilful-misstatement or suppression of facts to evade

tax has not been established against the person to whom the

notice was issued, the proper officer shall determine the tax

payable by such person, deeming as if the notice were issued

under sub-section (1) of section 73.

(3) Where any order is required to be issued in pursuance

of the direction of the Appellate Authority or Appellate Tribunal or

a court, such order shall be issued within two years from the date

of communication of the said direction.

(4) An opportunity of hearing shall be granted where a

request is received in writing from the person chargeable with tax

or penalty, or where any adverse decision is contemplated

against such person.

(5) The proper officer shall, if sufficient cause is shown by

the person chargeable with tax, grant time to the said person and

adjourn the hearing for reasons to be recorded in writing:

Provided that no such adjournment shall be granted for more

than three times to a person during the proceedings.

(6) The proper officer, in his order, shall set out the

relevant facts and the basis of his decision.

(7) The amount of tax, interest and penalty demanded in

the order shall not be in excess of the amount specified in the

notice and no demand shall be confirmed on the grounds other

than the grounds specified in the notice.

(8) Where the Appellate Authority or Appellate Tribunal or

court modifies the amount of tax determined by the proper

officer, the amount of interest and penalty shall stand modified

accordingly, taking into account the amount of tax so modified.

(9) The interest on the tax short paid or not paid shall be

payable whether or not specified in the order determining the tax

liability.

(10) The adjudication proceedings shall be deemed to be

concluded, if the order is not issued within three years as

provided for in sub-section (10) of section 73 or within five years

as provided for in sub-section (10) of section 74.

(11) An issue on which the Appellate Authority or the

Appellate Tribunal or the High Court has given its decision which

is prejudicial to the interest of revenue in some other

proceedings and an appeal to the Appellate Tribunal or the High

Court or the Supreme Court against such decision of the

Appellate Authority or the Appellate Tribunal or the High Court is

pending, the period spent between the date of the decision of the

Appellate Authority and that of the Appellate Tribunal or the date

of decision of the Appellate Tribunal and that of the High Court or

the date of the decision of the High Court and that of the

Supreme Court shall be excluded in computing the period

referred to in sub-section (10) of section 73 or sub-section (10) of

section 74 where proceedings are initiated by way of issue of a

show cause notice under the said sections.

(12) Notwithstanding anything contained in section 73 or

section 74, where any amount of self-assessed tax in

accordance with a return furnished under section 39 remains

unpaid, either wholly or partly, or any amount of interest payable

on such tax remains unpaid, the same shall be recovered under

the provisions of section 79.

(13) Where any penalty is imposed under section 73 or

section 74, no penalty for the same act or omission shall be

imposed on the same person under any other provision of this

Act.”

The petitioner's contention is that the word “money” is not

included in Section 67(2) of the CGST Act, 2017 and therefore, once

the “money” is not included under Section 67(2) of the CGST Act, 2017

the Investigating Agency / Department is not competent to seize the

same.

17- This Court has carefully gone through Section 67 of the

CGST Act, 2017 and the expression used in sub-section (2) of Section

67 is “confiscation of any documents or books or things, which in

proper officer's opinion shall be useful for or relevant to any

proceedings under this Act, are secreted in any place”. Thereafter,

sub-section (2) has two provisos and first proviso relates to goods and

the second proviso refers to documents or books or things so seized

shall be retained.

18- The core issue before this Court is that whether

expression “things” covers within its meaning the cash or not. In the

considered opinion of this Court, the CGST Act, 2017 has to be seen

as a whole and the definition clauses are the keys to unlock the intent

and purpose of the various sections and expressions used therein,

where the said provisions are put to implementation. Section 2(17)

defines “business” and Section 2(31) defines “consideration”. In the

considered opinion of this Court a conjoint reading of Section 2(17),

2(31), 2(75) and 67(2) makes it clear that money can also be seized

by authorized officer.

19- The word “things” appears in Section 67(2) of the CGST

Act, 2017 is to be given wide meaning and as per Black's Law

Dictionary, 10th Edition, any subject matter of ownership within the

spear of proprietary or valuable right, would come under the definition

of “ thing” (page No.1707). Similarly, Wharton's Law Lexicon at page

No.1869 and 1870, the word “thing” has been defined and it includes

“money”. It is a cardinal principle of interpretation of statute that

unreasonable and inconvenient results are to be avoided, artificially

and anomaly to be avoided and most importantly a statute is to be

given interpretation which suppresses the mischief and advances the

remedy (Interpretation of statute by Maxwel , 12th Edition, page No.199

to 205). The same preposition of law is propounded in Craies on

Statute Law, 7th Edition, page No.94).

20- The Hon'ble Supreme Court in the case of D. Vinod

Shivappa Vs. Nanda Belliappa reported in (2006) 6 SCC 456 in

paragraph No.12 as held as under:-

“12. It is well settled that in interpreting a statute the

court must adopt that construction which suppresses the

mischief and advances the remedy. This is a rule laid down in

Heydon's case [(1584) 76 ER 637 : 3 Co Rep 7a] also known as

the rule of purposive construction or mischief rule.”

Therefore, keeping in view the aforesaid interpretation of

the word “thing” money has to be included and it cannot be excluded

as prayed by the petitioner from Section 67(2). The present case is at

the stage of search and seizure. A search has been carried out and

proceedings are going on.

21- A Division Bench of this Court in the case of Sumedha

Dutta & Another Vs. The Union of India & Another (Writ Petition

No.23680/2018, decided on 04/04/2019) in paragraphs No.9 to 12 has

held as under:-

“9. The Hon'ble Apex Court in the case of Director

General of Income Tax (Investigation) & Others v/s

Spacewood Furnishers Pvt. Ltd & Others reported in 2015

(374) ITR 595 (SC) has dealt with the scope of interference by

the High Court in the matter of search and seizure. The Apex

Court has held that findings with regard to satisfaction touching

upon sufficiency and adequacy of reasons and authenticity and

acceptability of information on which satisfaction reached, is not

permissible in writ jurisdiction. The scope of interference has

been dealt with in depth by the Apex Court.

10. The Apex Court in the case of Dr. Pratap Singh &

Another v/s Director of Enforcement & Others reported in AIR

1985 SC 989 has held that illegality, if any, does not vitiate the

evidence collected during the search.

11. The Orissa High Court in the case of Aditya Narayan

Mahasupakar v/s Chief Commissioner of Income Tax &

Others reported in 2017 (392) ITR 131 (Orissa) was dealing

with the issue of search and seizure with specific reference to

warrant of authorization and it has been held that the High Court

should not go into the sufficiency and insufficiency of the ground,

which induce the Income Tax Officer to arrive at a conclusion to

carry out search and seizure operation.

12. The scope of interference at this stage is very limited

and the Income Tax Act, 1961 provides a complete mechanism,

which has been followed after the search and seizure operation

has been carried out. Even if it is presumed for a moment that

warrant relating to search and seizure was not proper and there

was some defect in it, the material collected during the search

and seizure cannot be brushed aside on this count alone. The

Income Tax Act, 1961 provides for a detailed procedure that has

to be followed and this Court, in the present writ petition, does

not find any reason to quash the entire search and seizure

operation as prayed by the petitioners in the relief clause.

Accordingly, the present writ petition stands dismissed.”

The Division Bench of this Court was dealing with a

search a seizure case and the writ petition was filed at the initial stage

only. Though it was a case under the Income Tax Act, 1961, however,

this Court has declined to interfere in the matter of search and seizure

by way of judicial review.

22- Much has been argued by learned counsel for the

petitioner in respect of “confessional statements” and the fact that the

husband of the petitioner has retracted at a later stage. In the case of

Surjeet Singh Chhabra Vs. Union of India reported in 1997 (89)

E.L.T. 646 (S.C.), the Hon'ble Supreme Court has held that

“confessional statements” made before Customs Officer though

retracted within six days is an admission and binding since Custom

Officers are not Police Officers. In the present case also the

statements were made confessing the guilt by the husband of the

petitioner and later on he has retracted from that statement as stated

in the writ petition and therefore, in light of the Hon'ble Supreme

Court's judgment no relief can be granted in the present writ petition

on the basis of aforesaid ground keeping in view the judgment of

Hon'ble Supreme Court.

23- A Division Bench of this Court in the case of R. S.

Company Vs. Commissioner of Central Excise reported in 2017

(351) E.L.T. 264 (M.P.) has dealt with “confessional statements” and

decided the matter in favour of the revenue and therefore, the ground

raised in the present petition that the husband of the petitioner

retracted the confessional statement does not help the petitioner nor

her husband in any manner.

24- Learned counsel for the petitioner has placed reliance

upon a judgment delivered in the case of Vinod Solanki Vs. Union of

India and Another reported in (2008) 16 SCC 537. Heavy reliance

has been placed in paragraph No.23 and the same reads as under:-

“22. It is a trite law that evidences brought on record by

way of confession which stood retracted must be substantially

corroborated by other independent and cogent evidences, which

would lend adequate assurance to the court that it may seek to

rely thereupon. We are not oblivious of some decisions of this

Court wherein reliance has been placed for supporting such

contention but we must also notice that in some of the cases

retracted confession has been used as a piece of corroborative

evidence and not as the evidence on the basis whereof alone a

judgment of conviction and sentence has been recorded. {See

Pon Adithan v. Deputy Director, Narcotics Control Bureau,

(1999) 6 SCC 1 : 1999 SCC (Cri) 1051}”

The aforesaid case was a case under the Foreign

Exchange Regulation Act, 1973 and the Hon'ble Apex Court has held

that evidence brought on record by way of confession, which stood

retracted must be substantially corroborated by other independent and

cogent evidence, which would lend adequate assurance to the Court

that it may seek to rely thereupon. In the present case, the authorities

are at the stage of investigation. The evidence is being collected and

and therefore, at this stage, the judgment relied upon by learned

counsel for the petitioner is of no help.

25- Resultantly, keeping in view the totality of the

circumstances of the case, the material available in the case diary and

also keeping in view Section 67(2) of the CGST Act, 2017, this Court is

of the opinion that the authorities have rightly seized the amount from

the husband of the petitioner and unless and until the investigation is

carried out and the matter is finally adjudicated, the question of

releasing the amount does not arise. The writ petition is dismissed.

Certified copy as per rules.

(S. C. SHARMA)

JUDGE

(SHAILENDRA SHUKLA)

JUDGE